Retired workers should be allowed to sell their pensions to the highest bidder, says minister Steve Webb

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There are fears pensioners would spend all their money on cars and holidays, then fall back on welfare (Source: Getty)

Retirees may soon get the right to sell off their savings for a lump sum, according to pensions minister Steve Webb.

Liberal Democrat Webb said that he wanted to go further than the reforms outlined by George Osborne at the last budget, which, from this April, allow workers to trade their pension savings for a lump sum.

Speaking in an interview with the Sunday Telegraph, Webb said that he wanted existing pensioners to be able to sell their annuities to the highest bidder, as many may prefer to invest or give away the money, as opposed to keeping it in annuities - a financial product criticised in the past for being poor value, especially in a low-interest rate environment.

Webb told the Sunday Telegraph:

I want to see people trusted with their own money wherever possible. I have already heard from people around the country who would like to see this change made.

I want to see if we can get these freedoms extended to those who are receiving an annuity but who might prefer a cash lump sum.

No-one would be obliged to do so, but for those who would prefer up-front capital to regular income, I can see no reason why this should not be an option.

When Osborne first announced the pension changes in the 2014 budget, fears were raised that pensioners might withdraw their money and spend it on luxury purchases such as holidays or cars, leading them to fall back on welfare.

The National Association of Pension Funds said at the time:

People often underestimate how long they will live and overestimate how long their pot will last. There is a recognised problem with the lack of financial literacy in the UK.

Further fears were raised regarding the property market. If pensioners were to invest in property en masse, especially if many entered the buy to let market, it could lead to a housing bubble and price many aspiring first-time buyers out of the market.